NEW YORK ( TheStreet) -- Believe it or not, you would have beat the Dow 2-to-1 over the last 12 months by investing in Brazil.
My favorite ETF, IShares MSCI Brazil ( EWZ) was up 85%, while the SPDR DJIA ETF ( DIA) was up a not-too-shabby 40% in one year's time. This 45% difference is a huge one when you start to compound returns. But you are probably thinking that the Brazil stock market is partied out. No way! There's more music ahead. Last January, I published a report on the Brazilian Bonanza on my site. Here are five more reasons Brazil is attractive for investment at current levels. Low Earnings Multiples: The average U.S. stock sells at 17 times this year's and 15 times next year's earnings. In contrast, Brazilian stocks are selling at 12.5 times earnings, or 20% less than U.S. stocks. The average earnings increase for Brazilian stocks is 15%-20%, and that assumes no major appreciation in the Brazilian currency. Alternatively, if you believe forecasts for target prices, then there is another 20% to 40% appreciation potential for the average among the 70 stocks I track in the Latin Capital Market Stock Index. Other benchmarking methods, such as price to sales/growth and relative dividend yield, generate even higher theoretical prices. Stable Currency: The strong Brazilian currency is both a blessing and a curse. The Brazilian real currency rallied by 32% in 2009, the biggest advance among the 16 major currencies. To combat a further rise in the real, the government imposed a 2% tax on foreign capital inflows into equities and fixed income investments. There is enough demand for this currency that the country is now running current account deficits. The Brazilian Central Bank is forecasting a 2010 current account deficit of $29 billion. Fortunately, Brazil has $243 billion in foreign exchange reserves to help exporters and the financial system deal with short-term liquidity disruptions. It's a solid currency, but don't expect the real to be the strongest Latin American currency in 2010. The most likely candidate for outperformance among currencies is the Mexican peso. If you agree, then buy the CurrencyShares Mexican Peso Trust ETF ( FXM). It's already up 8% year-to-date vs. the flat returns from the WisdomTree Drefyfus Brazilian Real Fund ETF ( BZF).